Goldman Sachs Warns Brent Could Top $130 If Strait of Hormuz Never Fully Reopens

Goldman Sachs Forecasts Elevated Oil Prices Amid Hormuz Uncertainty

Brent crude could average $80 by the end of 2026 and $75 in 2027, according to Goldman Sachs, though the bank warns upside risks remain skewed higher due to ongoing supply disruptions in the Middle East. The forecast comes as markets price in a base-case recovery of regional exports by late July, with strait transit volumes needing to reach 70% of pre-conflict levels for normalization.

Daan Struyven, Co-Head of Global Commodities Research at Goldman Sachs, highlighted that the recent selloff from above $120 to the low $80s reflects market confidence in partial supply recovery. However, the key uncertainty lies in Iranian intent rather than logistical capacity, with potential for false starts in transits.

Risk Scenarios: Upside Potential vs. Demand Weakness

An upside scenario projects Brent prices exceeding $130 by year-end if the Strait of Hormuz remains constrained and Gulf exports recover gradually. Conversely, a faster reopening combined with persistent demand losses could push prices to $60 in 2027. Struyven noted both scenarios carry roughly equal probability, though the upside move carries significantly larger magnitude.

China’s 4-5 million barrels per day decline in crude imports has been a critical factor preventing prices from breaching triple digits. While 90% of this demand loss is expected to recover by 2027, structural shifts from electric vehicle adoption may leave a residual 500,000 bpd drag on consumption.

Implications for Traders and Risk Sentiment

The persistent disruption premium underscores elevated geopolitical risk in energy markets. Forex traders should monitor central bank responses to potential inflationary pressures from sustained higher oil prices. The DXY and commodity-linked currencies such as the Canadian dollar may face volatility amid shifting risk sentiment.

Technical indicators suggest oil markets remain sensitive to Middle East developments, with key support levels around $70 and resistance near $130. Traders are advised to maintain flexibility given the asymmetric risk profile.

Disclaimer: This analysis is for informational purposes only and should not be considered investment advice. Oil prices are highly volatile and subject to sudden geopolitical and macroeconomic shifts.